Abezon - Help!

[gobonas99]

What is the name of your state? NY

Abezon -

At the beginning of the month, I posted a message about how my husband was looking into a temporary transfer to Maryland. See post: [url]http://forum.freeadvice.com/showthread.php?s=&threadid=146580[/url]

Well...they offered him the TDY, and he accepted, and then they changed their minds and said a TDY was too expensive and changed the offer to a permanent transfer. As we absolutely cannot afford 2 full living quarters expense (me here in NY and him in MD), he turned down their changed offer. He is now looking into the renewed possibility of a "permanent" transfer in VA. A friend of his recently moved down there to work for the same company, and has offered to rent him a room in his new house for between $400-500 a month, including all utilities (we haven't settled on an amount yet).

I put the "permanent" in quotes because he would stay there for 12 months, then at the end of the 12 months, he would either come back here to NY, or I would move down there to VA (the preference is to come back here).

What are the tax implications of this? Until such time as I move there (if it comes to that), ALL bills, his mail, etc will continue to be sent to our home here in NY.

Since with the "permanent" position, NOTHING will be reimbursed by the company, he should keep receipts of everything he buys (groceries, gas, other things) as well as a mileage log, in order to deduct it on form 2106, correct? What about the rent? He would be renting from a friend, so would we just have the friend write us a monthly receipt stating "$500.00 received as payment for rent and utilities for the month of X"? In order to deduct this, our friend will have to report it as rental income, yes?

Thanks in advance for all your help! This whole thing give me a headache!

-Christina

[abezon]

He can only deduct the costs of living away from home if the job is temporary -- everyone expects it to last a year or less. If it's permanent from the company's point of view, he can't deduct the extra living expenses. Try to get the company to give him something in writing stating that this is a 1-year position.

Once he gets the letter, have him keep all those receipts. The friend would not need to declare the rent as income if their relationship is that of roommates, rather than landlord-tenant. It would be better if they each pay the landlord directly, rather than him paying the friend. If that's not going to happen, then definitely get receipts from the friend.

[gobonas99]

I guess he'd have to get receipts from our friend, since our friend doesn't have a landlord - he OWNS the townhouse. But I guess it is a moot point anyway because as far as the company is concerned, it would be a permanent transfer. I seriously doubt that they would give him any kind of "1-year position" letter - and he doesn't want to ask them (he thinks that they wouldn't offer him the position in that case).

It's not what I wanted to hear, but thanks for your help, anyway.

So...how is this going to effect our taxes come April?

Thanks!
-Christina

[abezon]

It won't change your federal taxes. I don't know what it's going to do to your state tax returns.